TD Bank has agreed to pay a $3 billion fine to settle charges regarding its failure to properly monitor money laundering by drug cartels. The fine includes a $1.3 billion penalty to the US Treasury Department’s Financial Crimes Enforcement Network, a record fine for a bank. Additionally, TD will pay $1.8 billion to the US Justice Department and plead guilty for violating the Bank Secrecy Act and allowing money laundering. The Department of Justice stated that TD Bank had long-term systemic deficiencies in monitoring transactions, which led to actual harm to American citizens and communities.
The failure to monitor over 90% of transactions allowed three money laundering networks to transfer more than $670 million through TD Bank accounts. The Office of the Comptroller of the Currency stated that TD processed hundreds of millions of dollars in highly suspicious transactions. As a result, TD Bank CEO Bharat Masrani publicly apologized for the failures under his leadership and committed to addressing and repairing the shortcomings. The bank is significantly ramping up its anti-money laundering efforts, including hiring over 700 new specialists and implementing new processes to prevent, detect, and measure financial crime risk.
The US government has imposed stringent monitoring and growth restrictions on TD Bank as part of the settlement agreement. The bank will be monitored by FinCEN for four years and will be required to relocate its anti-money laundering compliance office to the United States. The OCC is also restricting TD Bank’s growth in the US, a move similar to what happened to Wells Fargo in 2018. The market reacted negatively to the news, with TD Bank’s US-listed shares dropping 6% as investors anticipate higher legal expenses and weaker growth in the future.
US regulators have expressed concerns about Mexican cartels using the US banking system to launder proceeds from drug sales. Officials have highlighted the importance of identifying and stopping money laundering activities by cartels. Some critics, including Senator Elizabeth Warren, believe that the penalties imposed on TD Bank are not sufficient, stating that big banks often treat fines as the cost of doing business. This settlement follows TD Bank’s payment of $1.2 billion to settle allegations related to its involvement in Allen Stanford’s Ponzi scheme.
Overall, TD Bank’s settlement to pay a $3 billion fine highlights the severity of the money laundering charges leveled against the bank. The agreement includes significant penalties, monitoring, and growth restrictions imposed by US regulators. The bank has committed to addressing the deficiencies in its anti-money laundering program and implementing measures to prevent future violations. The case serves as a reminder of the importance of financial institutions adhering to regulations and maintaining the integrity of the banking system.
